7 Roadway engineers must decide whether to specify granite o

7. Roadway engineers must decide whether to specify granite or cast-in-place concrete curbs. Suppose granite curbs cost $27 per linear foot, installed, and last 100 years, while cast-in-place concrete curbs cost $13.50 per linear foot, installed, and last 50 years. With interest at 7%, which do you recommend? a) Granite about is twice as expensive as concrete b) Granite is slightly more expensive than concrete c) Granite is much cheaper than concrete d) None of the above

Solution

Correct option is (a).

Let us compute Present worth (PW) of costs for both options.

PW, Granite ($) = 27 x P/A(7%, 100) = 27 x 14.2693** = 385.27

PW, Concrete ($) = 13.5 x P/A(7%, 50) = 13.5 x 13.8007** = 186.31

PW of Granite / PW of Concrete = $385.27 / $186.31 = 2.07